Long-term care coverage pitfalls

Long-term care insurance has received a lot of press coverage lately. Insurers are getting out of the market; companies holding on are asking for double-digit rate hikes. And as that big chunk of Americans, the Baby Boomers, reach retirement age, industry insiders were hoping more people would buy long-term care policies for themselves or for their Boomer parents. The market conditions have put a damper on those hopes. Market conditions may also be responsible for an increase in long-term care insurance claim denials.

The reason people buy long-term care insurance — and about 8 million Americans have the coverage right now — is to pay for in-home care, nursing homes or assisted living facilities. Like any insurance coverage, it’s supposed to pay for the things that you can’t pay for. It’s stressful even if everything works smoothly; the stress increases exponentially when an insurance claim is denied. A recent Wall Street Journal article laid out some suggestions on how to minimize the chances that a claim will be denied.

At the top of the list is the usual advice: Read your policy. Knowing and understanding what your policy covers before a claim is made will not only reduce the stress of that denial but will also help you and your family think about long-term care options ahead of time. People who purchased their policies 20 years ago will likely have tougher requirements — mandatory hospital stays, for example — before benefits kick in. Consider what your health issues are likely to be and plan accordingly. Alzheimer’s patients, for example, may not need hospital care before going to assisted living — no hospital, no coverage. You’d be paying for the care out of your own pocket.

In our next post, we’ll discuss a few more things to look for in your long-term care policy.